Hello there,
As the Donald Trump administration approaches the 100-day mark of its time in office, its attempts to remodel the global trading system are already showing up in the real economy as felt by ordinary households and businesses.
In the United States itself, the latest version of the Federal Reserve's "Beige Book" - a collection of anecdotal accounts on the state of the economy published eight times a year - makes for uncomfortable reading.
On the east coast, the Richmond Fed described one coffee roaster reporting historic cost increases; a sheet metal fabricator unsure about future orders due to steel tariffs; and a military equipment manufacturer reporting conditions being “too chaotic” to make any decisions on future investments.
The Chicago Fed told of one machinery manufacturer trying to deal with vendors who were changing prices daily, while officials in Atlanta said a small but increasing share of contacts were now eyeing headcount reductions.
It all meant that U.S. business activity this month slowed to a 16-month low, another closely watched survey showed, even as Trump hastily gave a 90-day reprieve on some of the worst of the tariffs after financial markets around the world recoiled.
Trump argues a bit of pain is inevitable as he attempts to transition the United States away from the world's top consumer to his vision of a "Made In the USA" manufacturing renaissance. And that pain is already showing elsewhere.
In the manufacturing hub of Guangzhou, Chinese companies at the huge Canton Fair expo said U.S. orders had dried up since Washington raised tariffs on Chinese goods by 145%.
"It's a matter of life and death because 60-70% of our business is with American clients," said Candice Li, marketing manager of Conmo Electronic Co. "Goods cannot be exported and money cannot be collected. This is very severe."
The massive uncertainty around Trump's next moves - and for many the dawning realisation that the low-tariff era of the past couple of decades may be over - is weighing on the mood among European manufacturers and households too.
Even in Britain, where shoppers have often proven resistant to broader concern about the economy, nerves are jangling.
The British Retail Consortium said consumer sentiment in its latest survey in early April fell to its lowest in at least a year - and that despite the UK not retaliating against Trump’s tariffs with levies that would push up prices of US imports.
Optimists on market trading floors, in company boardrooms and government offices are looking this week towards one man who they hope can de-escalate the looming trade war: U.S. Treasury Secretary Scott Bessent.
This week's meetings of the IMF and World Bank in Washington are something of an international launch party for the former hedge fund manager, who in February chose to pass up on a chance to meet his fellow G20 finance ministers for talks in South Africa.
They will be courting Bessent in one-on-one talks for deals they hope will help them escape the worst hits from tariffs once Trump's 90-day window for talks has closed - either by promising to buy more American goods or to cut their own import levies.
We may see by the weekend and the end of the IMF/World Bank events whether those talks amount to anything. In the meantime, Bessent has given some hope to the optimists by declaring that the 145% U.S. tariffs on Chinese goods and China's 125% tariffs on U.S. goods are not sustainable.
"This is the equivalent of an embargo and a break between the two countries in trade does not suit anyone's interest," he said in comments which buoyed financial markets.
But if that was intended as a peace offering, Beijing has brushed it aside, contradicting Trump's suggestions that there were talks between the two to de-escalate and insisting the first move was for Washington to make.
"The person who tied the bell must untie it," the Chinese Commerce Ministry's spokesperson told a press conference on Thursday.
